Benefits of Shared Ownership

You may be able to purchase a higher value property than your deposit sum would typically allow. Mortgage lenders need at least a 5% deposit as a minimum. With Shared Ownership, the 5% deposit rule only applies to the value of your share, rather than property’s total value.

As you will not be purchasing the entire property, the mortgage sum should be less as a result. This means that you will make a saving on interest payable. In times where interest rates are high, this saving can be significant.

Most shared ownership properties allow for staircasing, which means to purchase more of the property over time. You will need to purchase a further 10% of the property’s value, as a minimum, to proceed with staircasing.

The majority of shared ownership properties are new builds. You should be protected by a Structural Warranty which will cover any structural issues that arise in the property. These warranties typically last for 10-12 years.

A Housing Association will own the other portion of the property and they will charge rent on their share. This rent payable will decrease as you staircase over time. Unfortunately, the high monthly rent payable can make shared ownership purchases unaffordable for many buyers.

You will be purchasing the property initially on a Leasehold tenure with Shared Ownership. As a result, monthly or annual ground rent and service charges are payable. This adds further costs to the purchase, which may increase over time at the Housing Association’s discretion.

Remember that if you sell a Shared Ownership property, the Housing Association will need to approve the sale. In addition, your buyer must also purchase on a Shared Ownership basis for the transaction to complete. This limits the number of buyers interested in the property, which makes selling more difficult.

Mortgage lenders have specific products for Shared Ownership. These products typically have higher interest rates than standard mortgages as their risk is greater. If a borrower fails to meet their monthly repayments, it is more difficult for the lender to recuperate their funds with Shared Ownership properties.